The Dynamics of Guanxi in Chinese High-Tech Firms: Implications for Knowledge Management and Decision Making

Zusammenfassung

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This paper employs multiple theoretical perspectives -- resource- and knowledge-based views as well as social network theory -- to explore the dynamics of guanxi in the context of Chinese entrepreneurial firms. The researchers propose a dynamic model and offer multiple propositions for researchers to examine the role of guanxi for knowledge management and decision-making at various developmental stages of such firms. By integrating the individual level phenomenon of guanxi with firm-level issues, the researchers provide new perspectives for future research as well as guidelines for managerial practices.

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The Dynamics of Guanxi in Chinese High-Tech Firms: Implications for Knowledge Management and Decision Making

Introduction

Guanxi, the existence of direct particularistic ties between two or more individuals (Tsui/Farh 1997), is one of the major dynamics in the Chinese society (Luo 1997). Interpersonal relationships exist everywhere. However, in China, they are ubiquitous in that the whole society is structured around webs of social relationships which are embedded in various bases of guanxi (Bian 1994). As more business-people enter the Chinese market and try to understand the complexity of the guanxi network, there is also an increasing interest among researchers to study the impact of guanxi on the behavior of Chinese people (Wong 1998) and Chinese firms (Luo 1997).

There are many ways in which researchers study guanxi. We adopt an approach that focuses on the different types of people with whom guanxi is formed (e.g., Tsui/ Farh 1997, Yang 1993): qinren1 (family members); shuren (acquaintances or familiar persons such as neighbors, or people from the same village, friends, colleagues, or classmates), and shengren (strangers). Understanding the roles they play in various situations helps us discover and effectively utilize the different types of guanxi. Tsui and Farh (1997) pointed out that these three types of guanxi (qinren, shuren and shengren) have different social psychological meanings to the parties involved and is governed by different sets of interpersonal rules. We argue that these categories would also lead to different types of social networks that have important implications for both knowledge management and decision-making processes within firms.

Companies demonstrate different needs and capacities for guanxi cultivation (Park/Luo 2001 ). However, prior research has focused only on the structure of guanxi and its relationship to outcomes at one point in time. For example, Xin and Pearce (1996) studied guanxi as "substitutes for formal institutional support" in privateowned companies. They found that executives of private firms, compared to their counterparts in other types of firms (i.e., state- or foreign-owned), considered guanxi (business connections) as more important, gave more unreciprocated gifts to build or maintain such connections, and depended more on connections for protection. Hui and Graen examined the role of guanxi in building successful organizational cultures and pointed out that "Not understanding the differences between the Chinese notion of guanxi and the American relationship notion may lead to the mismanagement of relationships between partners or between superior and subordinates of different cultural backgrounds" (1997, p. 459). Farh, Tsui, Xin and Cheng (1998), discussing the difference between guanxi and the Western concept of relational demography, investigated the applications of both in the Chinese vertical dyads. Their results support the importance of both guanxi and relational demography for subordinates' trust in their supervisors. However, only guanxi was found to be important for business executives' trust in their connections.

More recently, Law, Wong, Wang and Wang (2000) studied the effect of supervisor-subordinate guanxi in supervisory decision-making processes and found that not only is the concept o...

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